McGraw-Hill/Irwin

9
Management
of Quality
9-2
Learning Objectives
Define the term quality.
Explain why quality is important and the
consequences of poor quality.
Identify the determinants of quality.
Describe the costs associated with quality.
Describe the quality awards.
9-3
Learning Objectives
Discuss the philosophies of quality gurus.
Describe TQM.
Give an overview of problem solving.
Give an overview of process improvement.
Describe and use various quality tools.
9-4
Quality Management
What does the term quality mean?
Quality is the ability of a product or
service to consistently meet or exceed
customer expectations.
9-5
Evolution of Quality Management
1924 - Statistical process control charts
1930 - Tables for acceptance sampling
1940s - Statistical sampling techniques
1950s - Quality assurance/TQC
1960s - Zero defects
1970s - Quality assurance in services

9-6
Quality Assurance vs. Strategic
Approach
Quality Assurance
Emphasis on finding and correcting defects
before reaching market
Strategic Approach
Proactive, focusing on preventing mistakes
from occurring
Greater emphasis on customer satisfaction
9-7
The Quality Gurus
Walter Shewhart
Father of statistical quality control
W. Edwards Deming
Joseph M. Juran
Armand Feignbaum
Philip B. Crosby
Kaoru Ishikawa
Genichi Taguchi

9-8
Key Contributors to Quality
Management
Contributor
Deming


Juran

Feignbaum

Crosby

Ishikawa


Taguchi

Ohno and
Shingo
Known for
14 points; special & common causes of
variation

Quality is fitness for use; quality trilogy

Quality is a total field

Quality is free; zero defects

Cause-and effect diagrams; quality
circles

Taguchi loss function

Continuous improvenment
Quality

Table 9.2
9-9
Dimensions of Quality
Performance - main characteristics of the
product/service
Aesthetics - appearance, feel, smell,
taste
Special Features - extra characteristics
Conformance - how well product/service
conforms to customers expectations
Reliability - consistency of performance

9-10
Dimensions of Quality (Contd)
Durability - useful life of the
product/service
Perceived Quality - indirect evaluation of
quality (e.g. reputation)
Serviceability - service after sale
9-11
Examples of Quality Dimensions
Dimension

1. Performance



2. Aesthetics

3. Special features



(Product)
Automobile
Everything works, fit &
finish
Ride, handling, grade of
materials used
Interior design, soft touch

Gauge/control placement
Cellular phone, CD
player


(Service)
Auto Repair

All work done, at agreed
price
Friendliness, courtesy,
Competency, quickness
Clean work/waiting area

Location, call when ready
Computer diagnostics






9-12
Examples of Quality Dimensions
(Contd)
Dimension

5. Reliability


6. Durability


7. Perceived
quality

8. Serviceability
(Product)
Automobile
Infrequency of breakdowns


Useful life in miles, resistance
to rust & corrosion

Top-rated car


Handling of complaints and/or
requests for information
(Service)
Auto Repair
Work done correctly,
ready when promised

Work holds up over
time

Award-winning service
department

Handling of complaints


9-13
Service Quality
Convenience
Reliability
Responsiveness
Time
Assurance
Courtesy
Tangibles

9-14
Examples of Service Quality
Dimension Examples
1. Convenience Was the service center conveniently located?
2. Reliability Was the problem fixed?
3. Responsiveness Were customer service personnel willing and
able to answer questions?
4. Time How long did the customer wait?
5. Assurance Did the customer service personnel seem
knowledgeable about the repair?
6. Courtesy Were customer service personnel and the
cashierfriendly and courteous?
7. Tangibles Were the facilities clean, personnel neat?
Table 9.4
9-15
Challenges with Service Quality
Customer expectations often change
Different customers have different
expectations
Each customer contact is a moment of truth
Customer participation can affect perception
of quality
Fail-safing must be designed into the system
9-16
Determinants of Quality
Service
Ease of
use
Conforms
to design
Design
9-17
Determinants of Quality (contd)
Quality of design
Intension of designers to include or exclude
features in a product or service
Quality of conformance
The degree to which goods or services
conform to the intent of the designers
9-18
The Consequences of Poor
Quality
Loss of business
Liability
Productivity
Costs
9-19
Top management
Design
Procurement
Production/operations
Quality assurance
Packaging and shipping
Marketing and sales
Customer service
Responsibility for Quality
9-20
Costs of Quality
Failure Costs - costs incurred by defective
parts/products or faulty services.
Internal Failure Costs
Costs incurred to fix problems that are detected
before the product/service is delivered to the
customer.
External Failure Costs
All costs incurred to fix problems that are
detected after the product/service is delivered to
the customer.
9-21
Costs of Quality (continued)
Appraisal Costs
Costs of activities designed to ensure
quality or uncover defects
Prevention Costs
All TQ training, TQ planning, customer
assessment, process control, and quality
improvement costs to prevent defects from
occurring
9-22
Substandard work
Defective products
Substandard service
Poor designs
Shoddy workmanship
Substandard parts and materials
Ethics and Quality
Having knowledge of this and failing to correct
and report it in a timely manner is unethical.
9-23
Quality Awards
Baldrige Award
Deming Prize
9-24
Malcolm Baldrige National
Quality Award
1.0 Leadership (125 points)
2.0 Strategic Planning (85 points)
3.0 Customer and Market Focus (85 points)
4.0 Information and Analysis (85 points)
5.0 Human Resource Focus (85 points)
6.0 Process Management (85 points)
7.0 Business Results (450 points)
9-25
Benefits of Baldrige Competition
Financial success
Winners share their knowledge
The process motivates employees
The process provides a well-designed
quality system
The process requires obtaining data
The process provides feedback
9-26
European Quality Award
Prizes intended to identify role models
Leadership
Customer focus
Corporate social responsibility
People development and involvement
Results orientation
9-27
The Deming Prize
Honoring W. Edwards Deming
Japans highly coveted award
Main focus on statistical quality
control
9-28
Quality Certification
ISO 9000
Set of international standards on quality
management and quality assurance, critical to
international business
ISO 14000
A set of international standards for
assessing a companys environmental
performance
9-29
ISO 9000 Standards
Requirements
System requirements
Management
Resource
Realization
Remedial

9-30
ISO 9000 Quality Management
Principles
Customer focus
Leadership
People involvement
Process approach
A systems approach to management
Continual improvement
Factual approach to decision making
Mutually beneficial supplier relationships
9-31
ISO 14000 - A set of international
standards for assessing a companys
environmental performance
Standards in three major areas
Management systems
Operations
Environmental systems
ISO 14000
9-32
Management systems
Systems development and integration of
environmental responsibilities into business
planning
Operations
Consumption of natural resources and
energy
Environmental systems
Measuring, assessing and managing
emissions, effluents, and other waste
ISO 14000
9-33
Total Quality Management
A philosophy that involves everyone in
an organization in a continual effort to
improve quality and achieve customer
satisfaction.

T Q M
9-34
1.Find out what the customer wants
2.Design a product or service that meets
or exceeds customer wants
3.Design processes that facilitates doing
the job right the first time
4.Keep track of results
5.Extend these concepts to suppliers
The TQM Approach
9-35
Elements of TQM
1. Continual improvement
2. Competitive benchmarking
3. Employee empowerment
4. Team approach
5. Decisions based on facts
6. Knowledge of tools
7. Supplier quality
8. Champion
9. Quality at the source
10. Suppliers
9-36
Continuous Improvement
Philosophy that seeks to make never-
ending improvements to the process of
converting inputs into outputs.
Kaizen: Japanese
word for continuous
improvement.
9-37
Quality at the Source
The philosophy of making
each worker responsible for
the quality of his or her work.
9-38
Six Sigma
Statistically
Having no more than 3.4 defects per million
Conceptually
Program designed to reduce defects
Requires the use of certain tools and
techniques

Six sigma: A business process for improving
quality, reducing costs, and increasing
customer satisfaction.
9-39
Six Sigma Programs
Six Sigma programs
Improve quality
Save time
Cut costs
Employed in
Design
Production
Service
Inventory management
Delivery
9-40
Six Sigma Management
Providing strong leadership
Defining performance metrics
Selecting projects likely to succeed
Selecting and training appropriate people
9-41
Six Sigma Technical
Improving process performance
Reducing variation
Utilizing statistical models
Designing a structured improvement
strategy
9-42
Six Sigma Team
Top management
Program champions
Master black belts
Black belts
Green belts
9-43
Six Sigma Process
Define
Measure
Analyze
Improve
Control

DMAIC
9-44
Lack of:
Company-wide definition of quality
Strategic plan for change
Customer focus
Real employee empowerment
Strong motivation
Time to devote to quality initiatives
Leadership

Obstacles to Implementing TQM
9-45
Poor inter-organizational communication
View of quality as a quick fix
Emphasis on short-term financial results
Internal political and turf wars
Obstacles to Implementing TQM
9-46
Criticisms of TQM
1. Blind pursuit of TQM programs
2. Programs may not be linked to strategies
3. Quality-related decisions may not be tied
to market performance
4. Failure to carefully plan a program
9-47
Basic Steps in Problem Solving
1.Define the problem and establish an
improvement goal
2.Define measures and collect data
3.Analyze the problem
4.Generate potential solutions
5.Choose a solution
6.Implement the solution
7.Monitor the solution to see if it
accomplishes the goal
9-48
The PDSA Cycle
Plan
Do
Study
Act
Figure 9.2
9-49
The Process Improvement Cycle
Implement the
Improved process
Select a
process
Study/document
Seek ways to
Improve it
Design an
Improved process
Evaluate
Document
Figure. 9.3
9-50
Process Improvement: A systematic
approach to improving a process
Process mapping
Analyze the process
Redesign the process
Process Improvement
9-51
Process Improvement and Tools
Process improvement - a systematic
approach to improving a process
Process mapping
Analyze the process
Redesign the process
Tools
There are a number of tools that can be
used for problem solving and process
improvement
Tools aid in data collection and
interpretation, and provide the basis for
decision making
9-52
Basic Quality Tools
Flowcharts
Check sheets
Histograms
Pareto Charts
Scatter diagrams
Control charts
Cause-and-effect diagrams
Run charts
9-53
Check Sheet
Billing Errors

Wrong Account

Wrong Amount

A/R Errors

Wrong Account

Wrong Amount



Monday
9-54
Pareto Analysis
80% of the
problems
may be
attributed to
20% of the
causes.
Smeared
print
N
u
m
b
e
r

o
f

d
e
f
e
c
t
s

Off
center
Missing
label
Loose Other
9-55
Control Chart
970
980
990
1000
1010
1020
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
UCL
LCL
Figure 9.11
9-56
Cause-and-Effect Diagram
Figure 9.12
Effect
Materials Methods
Equipment People
Environment
Cause
Cause
Cause
Cause
Cause
Cause
Cause
Cause
Cause
Cause
Cause
Cause
9-57
Run Chart
Time (Hours)
D
i
a
m
e
t
e
r

9-58
Tracking Improvements
UCL
LCL
LCL
LCL
UCL
UCL
Process not centered
and not stable
Process centered
and stable
Additional improvements
made to the process
Figure 9-18
9-59
Methods for Generating Ideas
Brainstorming
Quality circles
Interviewing
Benchmarking
5W2H
9-60
Team approach
List reduction
Balance sheet
Paired comparisons
Quality Circles
9-61
Identify a critical process that needs
improving
Identify an organization that excels in
this process
Contact that organization
Analyze the data
Improve the critical process

Benchmarking Process